1. Field of Invention
This invention generally relates to a system and method that provides a pre-paid credit account, where the value of the account is based on the market price of an underlying commodity instrument. More specifically, this invention relates to a system and method for using a purchase card to make purchases against a credit account secured by an underlying investment in gold bullion.
2. Description of Related Art
Gold is a highly precious and coveted metal, and it is a popular investment vehicle for individual and institutional investors alike. Gold is tradable in troy ounces and, in recent years, it has provided higher returns compared to other investment vehicles, such as equities and real estate. Furthermore, gold has traditionally been considered a safe and conservative means of investing, and it can be easily liquidated into cash and acceptable in various types of transactions throughout the world.
There is a strong demand for gold all over the world, as its value tends to be more stable than currencies and other forms of investment. Specifically in today's market conditions, fluctuating interest rates to fight inflation continues to create a negative climate for investors seeking to invest in traditional equities and bonds. Investors hoping for safer asset types have therefore shifted to investments in commodities such as gold bullion, natural gas, sugar, etc.
As such, gold is an important asset and is safe even in times of economic instability. However, individuals wishing to physically posses gold encounter various hurdles, such as fabrication costs to convert raw gold into market-approved gold bullion bars of standardized shapes and weight, transportation costs, tariffs and taxes to move gold bullion across jurisdictions, and risks associated with safekeeping. Furthermore, the weight and size of gold coins and bars makes it impractical as an everyday trading currency.
Therefore, there exists a need for a system and method for a commodity-based purchasing and investment vehicle that is practical and easy to use.